"‘Make in India’ has been in the forefront of Prime Minister Modi’s vision of putting India in the global manufacturing map. However, experts now point out that a lot still needs to be done to make it a reality as Sanjay K Jain, MD, TT writes in “Make in India – is it happening” Indeed it has been a major programme the PM and rightfully so as India has truly lagged in manufacturing sector. As he says, “All the ingredients are there but still the dish is far from complete as the receipe is yet to be figured out."

‘Make in India’ has been in the forefront of Prime Minister Modi’s vision of putting India in the global manufacturing map. However, experts now point out that a lot still needs to be done to make it a reality as Sanjay K Jain, MD, TT writes in “Make in India – is it happening” Indeed it has been a major programme the PM and rightfully so as India has truly lagged in manufacturing sector. As he says, “All the ingredients are there but still the dish is far from complete as the receipe is yet to be figured out. The negative to flat industrial growth rates in the recent past when the economy is said to be growing at 7 per cent plus is another disturbing and eye brow rising piece of data,” he writes. Jain says we ourselves are a manufacturer who sells domestically and exports across the globe. “The Make in India programme had excited me also personally and had hoped for a lot to happen.”

What works for India is its ample labour at reasonable cost, a huge domestic market, ample opportunity for import subsitution, rich reserves of raw materials, a proactive government, yet the Make in India vision has really not taken off as expected.

Making Make in India a Reality Jain writes in his article, “As I sit down and ponder objectively, prompted by the growing influence of Chinese products in our country – it makes me wonder how Make In India dream will be fulfilled. I am asked by many youngsters as to what sectors and segments hold great potential. My instant reaction is that avoid the manufacturing sector – it makes me guilty of not being in sync with our PM who I admire a lot. I looked around to see whether my advice is wrong, however sadly the more I analyse and look around, the more convinced I am that my advice is correct,” reiterated Jain.

Jain says, many have countered him to say as businessman he should be promoting ‘Make in India’ strongly. But he is able to convince himself and find sufficient logic/reason to share the excitement. “It is pertinent to understand as to why have the educated class of the country, mostly shunned entreprenuership and more so the manufacturing sector,” he opines.

Jain says everyone feels owning a factory means one is rich and everyone tries to extract their pound of flesh. This leads to a factory being harrassed by: local people on various counts. Inspector raj should be managed as they have omni powers to penalise you; multiple laws regulate factories; labour and trade unions must be managed.

Issues that plague the system

Jain asserts, to get consolidated land for a factory is a nightmare, and thereafter no insurance that it’s going to stay with you. Moreover a manufacturer is open to risk of fire, calamities, accidents and so on. “Despite being one of the fastest growing economies, we are far behind even smaller nations when it comes to Ease of doing business. World Bank recently confirmed India’s ranking at 130 out of 190 nations (means no progress made by us despite intentions).”

Another bugbear is power which is extremely expensive in most parts of the country. The Electricity Act was passed in 2003, however still many States don’t allow purchase of power and many make it inviable by imposing cross subsidies, taxes, charges etc. Power on IEX is available as low as Rs 2/unit, however its landed cost to industry multiplies 2 to 3 times, where allowed to be purchased. The moot point is that why should State Electricity Boards be allowed to act as monopolies?

Interest rates are extremely high. Despite RBI having decreased their rates by 175 basis points over last 18 months, the banks have not even decreased by 100 basis points!!! Why should compliant customers pay for NPAs and inefficiencies of banks?

Jain says labour attrition, absenteeism, education levels make manufacturing consistently a challenge. Some reasons for this same are number of religious festivals we have across the country, MNRGEA which makes labour take long leaves for their home town, culturally not a disciplined country, education levels in rural still very low – makes skilling difficult, propensity to migrate has reduced, married women working is still very low.

Economies of scale are difficult to develop due to poor availability of consolidated land, issues of employing large number of labour in one location – one stray incident or displeasure of local leaders can ruin a company. There are hardly any favourable FTAs, which could provide a big market to Indian companies to dare to set up large capacities.

Jain says manufacturing taxes too add to the problem. “Manufacturing is taxed and taxed, ensuring they never can generate sufficient return on capital employed unless they are in some industry where they enjoy monopoly or subsidies,” he says. Apart from direct taxes, companies pay a host of indirect taxes. Cross-subsidies are the order of the day. Even after paying taxes and taxes for meeting government expenditure, they have to pay cross subsidies on a host of expenses to subsidise other sectors like power, interest, freight etc. Even indirect tax collection like VAT is the duty of the purchaser – its duty of company to ensure his supplier pays taxes instead of VAT department who has registered them.

What needs to be done?

Jain feels unless we in spirit don’t understand the importance of manufacturing sector and its role in development of the country by generating employment, revenue, self reliance, earning foreign exchange by exports and import subsitution, reducing cost of products for the common man – we shall never ever see the dream of India becoming a manufacturing hub and factory of the world like other nations have become over the last few decades.

Today the service sector looks attractive and all are zeroing on it. But Jain questions, without a vibrant primary economy how can the supporting segments thrive and grow. Indeed, the government has understood all this and hence, ‘Make in India’ came up, “however, to realise the dreams on ground, we have miles to go. We also recognise that it needs the combined efforts of both Centre and state to make things work, hence important to build a Federal consensus like being done for GST. Federal competitiveness is already visible and the Statewise ranking on Ease of Doing Business is also a welcome step.

Jain hopes ground level problems are understood and appreciated before it’s too late.